Ohh That's Rich - no tax on tips scam

[Ms. Toad]

9. It's a full deduction of the tip income up to 25,000.

You deduct it from income, rather than from taxes - so the reduction doesn't reduce taxes $1 for every $1 tipped.

The overtime deduction is a bit more nuanced. You can only deduct the amount extra you were paid for working overtime.

So for my daughter's overtime pay, I could only deduct 1/3, because the pay included the "time" she would have been paid anyway, as well as the "half" she was paid for being beyond the 40 hours/week. And employers didn't necessarily report it separately - so you have to have a stub which indicates it, and understand how they calculated it in order to figure out how much is actually deducted.